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Tarmac has answer to 64bn question

ITS NOT a joint-venture and its not a merger it is a new company. Tarmac Servicemaster was set up earlier this month by Tarmac FM and the UK arm of US facilities management giant Servicemaster.

Marketing director Gerry Barron-Fox says: We have effectively created a 50-50 joint owned company.

The company fits into the professional services division which Tarmac has been building. It is in the same mould as TBV Consult, the former PSA construction management company jointly owned by Tarmac and US design engineer Black and Veitch.

Tarmac FM managing director Stuart Laird is at the helm of the new company which, for the immediate future, is based at Tarmacs offices in Richmond, south-west London. Thirty top Servicemaster executives will join the firm along with 40 staff from the maintenance division of Tarmac mechanical and electrical subsidiary Crown House, taking the size of the former Tarmac FM to 350.

The deal had the personal backing of Tarmac chief executive Neville Simms, who visited Chicago-based Servicemaster last summer. His meeting was timely. The US company was looking for a British partner to help it crack Britains booming 64 billion facilities management market.

Servicemaster already operated in 29 countries but lacked expertise in the complex British market. In particular, the transfer of public sector undertakings (TUPE) legislation was providing Servicemaster with a headache as it established a foothold in Britains developing healthcare market.

The Tarmac people were impressed by Servicemasters US operation, particularly its 4 million a year research and development budget, its use of plant and equipment databases and its 94 per cent customer retention rate. The move to join forces with the US firm boosts the progress Tarmac FM has made over the past two years, building up a turnover of 34 million mainly through organic growth rather than acquisition.

Recent successes include a 4.1 million a year contract to operate and maintain Derby Royal Infirmary and a total FM contract for British Gas at Reading.

Next year the newly combined Tarmac Servicemaster plans to increase its turnover to 50 million and Mr Barron-Fox is hunting down big clients in pharmaceuticals, food processing and car manufacturing.

He says: We want our jobs to be long-term with clients who are multi- site and who can give us lots of work over time.

And Mr Barron-Fox argues that Servicemasters track record as an FM provider to blue chip companies like Hertz, North West Airlines, Amtrack, Kelloggs and General Motors should provide a big in to US multinationals operating in Britain. He claims the American connection is paying dividends. I have seen nine prospective clients in industry and commerce and if I could win just two it would add 40 million to our turnover.

Servicemaster has a 20-year business plan which leaves Tarmac Servicemaster to go for growth in Britain.

Mr Barron-Fox has high hopes. He expects his company to be among Britains top 10 FM providers within 18 months and after three years he wants it to be the biggest.

Facilities management is attracting a range of firms from estate agents and quantity surveyors to caterers and cleaning companies. Stephen Hoare examines how Tarmacs much- vaunted partnership with US company Servicemaster intends to compete in this crowded market